The latest scheme to make the Wall Street fat cats even fatter (with our money, of course), courtesy of their friends at the Federal Reserve:
("Excess reserves" are the amount above the percentage of their assets that banks are required to keep at the Federal Reserve.)
Kudos to the Senate for confirming Ben Bernanke to another 4-year term as chairman of the Fed. Wall Street is very appreciative, as I'm sure will be reflected in future (ahem) "campaign contributions."
"During the financial crisis, it [the Fed] bought hundreds of billions of dollars of real-estate loans and securities from banks to reduce mortgage rates and ease the pressure on bank balance sheets. This, in turn, pumped hundreds of billions of new dollars into the economy, which has helped the banks-and bankers-to make a killing over the past year.
...The idea behind giving the banks cheap money was that the banks would lend it to consumers and businesses. Unfortunately, that hasn't happened: Since the start of the crisis, bank lending has fallen off a cliff.
The banks are, however, lending to the federal government [the current 30-year T-bill rate is about 4.5%] which needs to fund record deficits by borrowing more than $1 trillion a year. Banks are also collecting interest--currently 0.25% a year--on the $1 trillion or so of "excess reserves" that they aren't lending to anyone."
("Excess reserves" are the amount above the percentage of their assets that banks are required to keep at the Federal Reserve.)
"The Fed's exit plan will call for increasing this interest rate, to encourage the banks to keep more money in excess reserves instead of lending it into the economy and thus expanding the money supply.
...Of course, in the process of increasing interest paid on reserves, the Fed will be paying banks even more not to lend. In the process, it will be giving banks yet another way to take nearly free money from the taxpayer and give it back to the government at a higher rate--and then pocket the difference.
It's a great time to be a banker."
Kudos to the Senate for confirming Ben Bernanke to another 4-year term as chairman of the Fed. Wall Street is very appreciative, as I'm sure will be reflected in future (ahem) "campaign contributions."
Well, who woulda thought that people would be reluctant to go out and borrow money in the midst of a recession to buy a new home, expand their business, purchase a new car they might not need or could not afford if they lot their job along with the other 750,000 who DID in the previous month?
The fact the WE the people DID NOT pull ourselves out of this recession by borrowing money that WAS THERE for the taking is just our BAD judgement. (Sarcasm light off)
I saw everybody's favorite treasury secretary on ABC's This Week. (Editorial comment: Thank God Babawa Wawa was gone from that forum.) Timmy made it clear to me, that HE was absolutely convinced the HE had done the right things all along andf that the recover would simply take longer than previously expected. And you know, I agreed with him about the recovery. What I am NOT convinced of is that HIS friends that CAUSED this mess and benefitted from it, are NOT also benefitting from the recovery, as it is, and that they will soon be poised to run the same play again, next series of downs. just to the other side of the line.
Last night, one of my favorite philosophers, Sir Charles Barkley, (NBA retired) said, concerning President Obama, "I'm tired of him letting the republicans boss him around." I don't know about you guys, but I think Sir Charles would make an EXCELLENT "Chief of Staff". When it comes to battling for the boards, there is NOBODY you want in the paint, elbowing for rebounds more than Charles.